Mexico to cut $8.4 billion in spending

- Cuts will not affect construction of a new Mexico City international airport but construction of $3.75 billion high-speed rail canceled

By Nancy Caouette

MEXICO CITY (AA) -- The federal government will cut about $8.3 billion of its 2015 budget to absorb losses associated with falling crude oil prices, Finance Minister Luis Videgaray said Friday.

Videgaray justified the adjustments that represent about 0.7 percent of Mexico’s GDP as “a preventive and responsible measure” aimed to “protect the stability of the economy” as oil sales and related taxes represent about a third of the revenue of the Mexican government.

He said the government does not plan to increase or create taxes and added that spending on key programs including education, agriculture and fighting poverty, would not be affected by the cuts.

The budget cuts will have no effect on the construction of a new Mexico City international airport, however, the government decided to cancel the construction of a $3.75 billion high-speed rail.

Among the biggest losers will be the state-owned oil company Petroleos Mexicanos, or PEMEX, slated to lose $4.1 billion, and the budget of the federal electricity commission will be cut by $670 million.

The global fall in crude oil prices has weakened the Mexican peso, which dipped beyond the 15-per-dollar level on Friday for the first time in six years.